Thyssenkrupp’s Earnings Leap Masks a Darker Revenue Picture

Thyssenkrupp has delivered a textbook restructuring paradox: a tenfold surge in operating profit alongside a downgraded sales forecast. The conglomerate’s second-quarter numbers for fiscal 2025/26 reveal a company that can squeeze costs but cannot escape the cyclical headwinds buffeting its core markets.

Adjusted EBIT rocketed to €198 million from a meagre €19 million a year earlier, far exceeding analyst expectations. The group credited its “Apex” efficiency programme and cost reductions in the steel division. Revenue, however, slipped 2% to roughly €8.4 billion, dragged down by weak automotive and machinery demand and lower steel prices.

The Marine Bright Spot

Within the portfolio, the TKMS naval unit continues to shine. Its order book swelled to €20.6 billion over the first half, with revenues climbing 10% to €1.17 billion. Adjusted EBIT from the marine business rose 14% to €60 million, underscoring its dual role as a growth engine and a profit centre.

The pipeline offers further ammunition. Thyssenkrupp is negotiating with India on a six-submarine deal worth around €8 billion and has submitted a bid for a Canadian programme valued at more than €10 billion. Any breakthrough in either tender would bolster the investment case for the submarine builder, which increasingly serves as the group’s strategic linchpin.

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Steel’s Uphill Battle

On the steel front, management opted for a more bullish valuation. The book value of Thyssenkrupp Steel Europe was raised to roughly €3 billion from €2.4 billion in December, reflecting restructuring progress and the anticipated impact of EU safeguard tariffs against cheap Asian imports. Chief executive Miguel López tempered that optimism, describing the environment as “extremely challenging.”

The division’s restructuring remains brutal: around 11,000 jobs are set to go by 2030. Meanwhile, the planned sale of a stake in the Hüttenwerke Krupp-Mannesmann joint venture to Salzgitter is targeted for completion by 1 June, a step that would further slim the group’s industrial footprint.

Negotiations with Jindal Steel over a full disposal of the steel unit have been paused amid valuation gaps and unresolved pension liabilities. López is now pushing ahead with the separation of the division under his own steam, inching Thyssenkrupp closer to a financial-holding model.

A Sharper Revenue Warning

The market’s immediate focus, though, fell on the revised top-line guidance. Thyssenkrupp now expects full-year revenue to land between a 3% decline and flat, a full percentage point lower on each side of the previous range of -2% to +1%. The net loss forecast stayed unchanged at €400 million to €800 million, with heavy restructuring charges in steel continuing to weigh.

Management blamed the downgrade on sluggish auto demand, geopolitical uncertainty, and an energy shock triggered by the Iran conflict—all factors largely outside TKMS’s control.

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Share Price Reaction

The stock initially dropped nearly 3% on the news before recovering to trade at €10.21, representing a 21% gain over the past 30 days. The pullback was hardly surprising: the shares had rallied as much as 60% from late March, leaving plenty of profit-takers on the sidelines.

Analysts remain split. Jefferies rates the stock a “Buy” with a €13 target, citing the potential from the marine order boom. JPMorgan’s Dominic O’Kane sticks with “Neutral” and a €10.10 price objective, acknowledging the earnings beat but pointing to the revenue revision as a clear signal of persistent cyclical risk.

Thyssenkrupp thus continues to walk a fine line. Its submarine business supplies both growth and credibility, while steel drags on the bottom line and clouds the outlook. The next catalysts—progress with India or Canada on submarine sales, or a breakthrough in steel separation—could tip the balance either way.

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Thyssenkrupp Stock: New Analysis - 12 May

Fresh Thyssenkrupp information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

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